Domestic Fuel

U.S. Senators Dianne Feinstein (D-CA) and Jon Kyl (R-AZ), together with 15 other senators, today sent a letter to the Senate leadership expressing their “lack of support for extending the current 54-cent-per-gallon tariff on ethanol imports and the 45-cent-per-gallon subsidy for blending ethanol into gasoline.”

Calling the incentives for domestic ethanol production “fiscally indefensible,” the senators wrote that ending them would “reduce the budget deficit, improve the environment, and lessen our reliance on imported oil.”

In response to the letter, Renewable Fuels Association (RFA) officials issued a statement saying that eliminating the investment in domestic ethanol production “may seem pennywise, but is extraordinarily pound foolish. Eliminating the tax incentive could erase the $3 billion of net revenue for federal tax coffers generated by the domestic ethanol industry in 2009 and put tens of thousands of Americans out of work.”

Addressing concerns about the secondary tariff on imported ethanol, the RFA stated, “The tariff on imported ethanol is neither a burden on imports nor a factor driving America’s dependence on imported oil. The tariff simply exists to offset the value of the tax credit, preventing American taxpayers from subsidizing foreign ethanol producers. In a time of budget concerns and tax debates, propping up industries in other nations that already enjoy the largesse of their native governments seems counterintuitive.”